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| The Tax Publishers2020 TaxPub(DT) 1371 (Del-Trib) INCOME TAX ACT, 1961
Section 37(1)
As evident from terms of concerned agreement, assessee had acquired only right to use of technical knowledge of foreign company. and not any benefit of enduring nature accrued to assessee. Accordingly, royalty paid by assessee in the peculiar facts and circumstances of case, was in the nature of revenue expenditure.
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Capital or revenue expenditure - Royalty - Assessee had acquired only right to use of technical knowledge of foreign company. -
Assessee company engaged in manufacturing of various body parts for small vehicles for Maruti Suzuki India Ltd. claimed deduction of royalty paid to non-resident. AO treated the same as capital expenditure eligible for depreciation @ 25%.Held: As evident from terms of concerned agreement, assessee had acquired only right to use of technical knowledge of foreign company. and not any benefit of enduring nature accrued to assessee. Accordingly, royalty paid by assessee in the peculiar facts and circumstances of case, was in the nature of revenue expenditure.
Distinguished:Southern Switchgear Ltd. v. CIT (1998) 232 ITR 359 (SC) : 1998 TaxPub(DT) 1053 (SC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2012-13
INCOME TAX ACT, 1961
Section 37(1)
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